It wasn’t long ago that South Africa was forced to walk a diplomatic tightrope, thanks to the government’s non-aligned stance on Russia’s war in Ukraine.
The outcome of next week’s African Growth and Opportunity Act summit will be the culmination of the hard work South Africa had to do to get back into Washington’s good graces after the Lady R saga, which caused the rand to tumble and inflicted immense pain on an economy that has barely regained its footing since the pandemic’s onslaught.
The message of that particular experience was clear — put one step wrong and the fall will be a long one.
Today, a war in the Middle East threatens to further fragment the global economy — a predicament that the International Monetary Fund (IMF) has warned would hurt its prospects of ever re-establishing momentum.
Despite US President Joe Biden’s recent contention that “American leadership is what holds the world together”, the superpower’s position on Israel’s imperialist assault on Gaza stands to do just the opposite.
America’s ties to Israel have recently forced Biden to draw an awkward link between the West’s fight against Russia’s invasion of Ukraine and Hamas’s attack on civilians on 7 October.
In a speech Biden gave on his return from Tel Aviv last week, he said America is facing “an inflection point in history”. The decisions the US makes today “are going to determine the future for decades to come”, Biden said, as he made the case for why America should financially back both Israel and Ukraine.
While Biden admitted that Russia’s president Vladimir Putin and Hamas constitute different threats, he lumped the two together under their shared goal to “completely annihilate a neighbouring democracy”.
Without any irony, Biden’s condemnation of Putin pointed to Moscow’s denial of Ukraine’s statehood.
Also without irony, the US president endeavoured to represent the US as a stabilising force in the Middle East, presumably through its attempts to normalise diplomatic ties between Saudi Arabia and Israel, an outcome now jeopardised by the latter nation’s brutal bombardment of Gaza.
Though he expressed empathy for Palestinians, Biden did not condemn Israel’s actions, which have led to the destruction of Gaza and the deaths of more than 4 000 people. The American president siding with Israel stands to further alienate countries in the global south which have resisted taking sides in the Russia-Ukraine war, despite pressure from the West.
In a show of hubris, Biden encouraged US support for Israel and Ukraine by saying: “American leadership is what holds the world together. American alliances are what keep us, America, safe. American values are what make us a partner that other nations want to work with. To put all that at risk if we walk away from Ukraine, if we turn our backs on Israel, it’s just not worth it.”
It has since emerged that the White House is seeking a $106 billion financial package for its interventions in Ukraine and Israel. The vast majority of that amount ($61.4 billion) will reportedly go towards Ukraine and replenishing stockpiles of weapons the US has already provided the besieged country.
Biden’s visit to Israel did result in aid entering Gaza. However, America’s support towards mitigating the unfolding humanitarian crisis looks to be dwarfed by the reported $14.3 billion Biden hopes to get to Israel. The White House’s proposed package reportedly includes $9.15 billion in humanitarian aid, which will be split between Ukraine, Israel and Gaza.
Important to note is that the White House is also asking for $7.4 billion which will go towards countering China — the economic powerhouse on the other side of a growing rivalry sometimes referred to as the second Cold War. America’s fears around China’s influence add a layer of complexity to US intervention in conflicts abroad, as the biggest economy attempts to maintain its gravitational pull in a more fragmented world.
The recent decoupling of global supply chains in the pandemic’s wake — and the economic ravages that ensued — has prompted a number of countries to fortify existing alliances and forge new ones.
As a recent report by the UN Conference on Trade and Development put it: “The asymmetry of gains from the international trading system, apparent in both the advanced and developing countries, has been building into a backlash against the rules of global governance and, increasingly, the very idea of free trade.”
Meanwhile, new trade paradigms have turned towards better accommodating other policy priorities, including reducing inequality. The continuous neglect of rising inequality, the UN report notes, has helped to fracture the world economy.
The global economy is shifting, a fact which threatens America’s primacy and the systems which have maintained it.
Indeed, the current conditions — including monetary tightening and debt distress — have given momentum to a push to create a new economic consensus, challenging the so-called Bretton Woods twins, the IMF and the World Bank.
For this reason, Americans watched closely as the Brics (Brazil, Russia, India, China, South Africa) nations gathered in Johannesburg two months ago.
Perhaps the most important outcome of August’s talks was the decision to expand the alliance to include Argentina, Ethiopia, Egypt, the United Arab Emirates, Saudi Arabia and Iran, which has found itself at the centre of the Israel-Hamas war. The Brics leaders also declared their intention to reduce their dependence on the dollar and to increase the pace of de-dollarisation.
The expanded economic bloc accounts for 30% of global GDP and has a growing population that already stands at 46% of that of the world.
With Russia pushed even further to the periphery, that country’s war, and the West’s response to it, has inspired something of a global south revival, though China’s dominance suggests the bloc’s future may continue to take on a sub-imperial posture.
Despite warnings by the IMF that fragmentation will hurt already fragile growth, the US has continued to pursue a type of economic nationalism that runs roughshod over the ambitions of the global south.
Biden is right in saying that the US faces an inflection point and that its choices now will echo through history. The question is, as the global economy fractures, whose future will it be?